Hobart correspondent for Fairfax Media

The architects of Tasmania's forest peace are scrambling to hold their deal together after it hit a wall in the state parliament's upper house.

Industry, union and green groups who hammered out the landmark deal over two years of talks said it had been jeopardised by the Legislative Council's decision to send it to a select committee.

But Vica Bayley from The Wilderness Society said on Friday all parties should still "hang tough" with the deal.

The council's move came despite federal and state government warnings against further delay to a package that would have secured $378 million-plus in funding, and protected up to 504,000 ha. of native forests.

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The deal was seen as key to ending Tasmania's crippling generation-long forest wars.

Now with months of uncertainty ahead while the select committee deliberates, the state's largest native timber processor, Ta Ann, said it was urgently reviewing its future and the viability of its two mills.

Federal funding underpinning the forests package is also in doubt.

Asked earlier this week what a reference to a select committee would mean, Environment Minister Tony Burke said: "if the circumstances change, the money's off the table. It has to be."

The mainly independent-conservative Legislative Councillors agreed 8-4 on Thursday to the select committee after a clear split emerged in the 15 member house over the enabling Tasmanian Forest Agreement bill.

Southern Tasmanian MLC, Paul Harriss, said the committee would ensure proper parliamentary procedure, and its work might be completed within three months.

Hobart MLC Jim Wilkinson said he wanted to keep the TFA bill alive, but no socio-economic analysis of the legislation had been conducted.

"I don't want to make a decision about 500,000 ha. of...Tasmanians' land without proper due diligence," Mr Wilkinson said.

Premier Lara Giddings said the establishment of an open-ended select committee cast a dark cloud of uncertainty over the state's forest industry.

"Change will continue to occur in the forest industry and further delays will only make that change harder for regional communities," Ms Giddings said.